Michigan Shingle Co. v. State Investment & Insurance

Grant, J.

(dissenting). This is a suit upon a policy of insurance dated September 2, 1890, and covering the same property as that in the case of Mich. Shingle Co. v. London & Lancashire Fire Ins. Co., 91 Mich. 441.

The policy is one known as, the “Michigan Standard,” being the one required by the Michigan statute. Its terms are identical in language with that of the London & Lancashire Fire Insurance Company. The warranty for the maintenance of 150 feet clear space is the same. The *399only difference between tbe facts of the two cases is that in this case the policy covered the lumber upon docks 3, 4, and 5, while in the former case the policy covered the lumber upon all the docks. The declaration was in the usual form, and alleged that the plaintiff had in all respects complied with the terms of the policy. This, of course, was an allegation that it had preserved 150 feet ■clear space between the property insured and “any woodworking or manufacturing establishment, and that said space had not been used for handling or piling of lumber thereon for temporary purposes, tramways alone being ■excepted.” The policy also provided that this clause should not be construed to prohibit loading or unloading within, or the transportation of lumber and timber products across, such clear space. The defendant introduced no testimony.

The situation of the property will be better understood by the diagram on following page.

The evidence on the part of the plaintiff tended to show that it maintained a clear space of 150 feet in a direct line from its lumber on docks 3, 4, and 5 to its mill; that it had been carrying on business there for several years; that it had never paid any attention to space between material stored on docks 1 and. 2 and its mill; that the customary rate of insurance on docks 1 and 2 was 5 per cent., and on docks 3, 4, and 5, 2£ per cent.; that to the east of dock 1 were situated the docks and saw-mill of another ■company, with a clear space of less than 100 feet between; that the agent of the defendant company visited the premises in the fall of 1889, and while both of these mills were in operation, for the purpose of examining the risk; that he was frequently upon the premises in the summer of 1890, and was familiar with the use made of docks 1 and 2, upon which shingles manufactured at plaintiff’s mill were piled for shipment. Plaintiff’s agejit was asked to state *401how insurance men regarded and treated the space maintained by the plaintiff between the material piled on docks 3, 4, and 5 and the mill. His reply was:

*400

*401Why, if we maintained a space between the material piled on docks 3, 4, and 5 and our own mill, that was full vindication of the requirements of the policy.”

One Easton, a local insurance agent, testified that he knew the use to which these docks were put, and that the rate of $2.75 per hundred on docks 3, 4, and 5 was because there was 150 feet space from the mill. On cross-examination the witness was asked:

“Q. When you say that that rate was fixed because it was more than 150 feet from any wood-working or manufacturing establishment, you mean because there was more than 150 feet of clear continuous space between the property rated and such an institution, do you not?
“A. I mean to say that there was 150 feet space between the shingle company's mill and this lumber.
“Q. In fixing the rate at $2.7,5 on lumber, it is established only in such cases where there is at least a continuous clear space of 150 feet between the property rated and such an establishment, is it not?
“A. I don't think there was 150 feet space.
“Q. You don't answer my question.
“A. That is the basis the rate is fixed.”

One Wood, another local insurance agent, testified that he thought the space between dock 1 and the westerly dock of the adjoining mill-owners, which was less than 100 feet, was considered equivalent to 150 feet. He further testified that sometimes docks 1 and 2 were covered with shingles, and sometimes they were not, and that they varied at different times in amount and in places where they were piled, according as they were manufactured and shipped. In reply to the question whether in placing insurance under the circumstances it would be expected by insurance men that the material on docks 1 and 2 should be removed, or *402whether he would simply expect to maintain substantially the same conditions as existed at the time, the insurance was effected, this witness said:

That would be considered as maintaining it at the time the insurance was effected by some insurance men. I don’t know that all would consider it so.”

All this testimony was received under objection and exception. At the time of the fire,, shingles were piled upon docks 1 and 2 to within 25 or 30 feet of the mill, and lumber was also piled upon the docks of the adjoining mill-owners to the east. The above is a substantial statement of all of the material testimony.

The court submitted the case to the jury, and the theory upon which this was done appears in the following portion of his charge:

The main controversy in question for you to decide is whether or not the plaintiff did maintain, during all the time this policy of insurance was in force, — that is, from the time it was issued up to and including the time of the fire, — this continuous clear space of 150 feet between the property insured on these three docks and any wood-working or manufacturing establishment, according to the true intent and meaning of that language as employed in that policy, and as the parties understood it. The plaintiff claims that it did. The defendant claims it did not. To entitle the plaintiff to recover, it must have satisfied you by a fair preponderance of the testimony in the case that it did maintain that clear space. Now, the contention is right there. The plaintiff says, ‘We did maintain it; we made the contract; we don’t deny it; it is there just as it reads; but we insist that we did maintain that space just as we understood it, and just as you understood it, — just as you knew we understood it.’”

The jury found a verdict for the plaintiff.

The facts were undisputed, and the question was one of law to be determined by the court. The jury must have found that the plaintiff and defendant’s local agent under*403stood and agreed that 35 or 30 feet between docks 1 and 3 and the mill was the equivalent of the 150 feet provided by the contract, and that the space of 96 feet between dock 1 and the next dock to the east was also the equivalent of 150 feet. The warranty was not one as to existing facts, but of conditions to be maintained in the future. There is nothing upon this record to show, nor is it claimed, that the plaintiff did not fully understand the terms of its contract. It knew that it had agreed to maintain 150 feet clear space. The condition was not impossible of performance. The result of this holding would be to set aside the plain and unmistakable terms of a contract, and substitute therefor by implication another and entirely different contract. The warranty was not affirmative, but promissory, in its character. If this be the rule, then if plaintiff had been in the habit of keeping a pile of lumber midway, and in a direct line, between these docks and its mill, and the defendant's local agent had known this when the policy was issued, the subsequent maintenance of such a pile of lumber would not have vitiated the policy, and the space would be held to be the equivalent of 150 feet clear space. Again, if there had been another mill or wood-working establishment situated 30 feet, or any number of feet less than 150, to the-northward of docks 3,' 4, and 5, this must in law be held to have been the like equivalent. Many other illustrations will readily suggest themselves to show the consequences of such a rule.

Mr. May, in his work on Insurance (section 156), says:

One of the very objects of the warranty is to preclude all controversy about the materiality or immateriality of the statement. The only question is, has the warranty been kept? There is no room for construction, no latitude, no equity. If the warranty be a statement of facts, it must be literally true; if a stipulation that a certain act shall or shall not be done, it must be literally performed.”

*404Plaintiff averred that it had kept 150 feet clear space. It did not allege that in one direction it kept only 25 or 30 feet, or that in another it kept but 96 feet, and that this was understood and agreed to be the equivalent of 150 feet. No such issue was framed for trial. If this clause had been inserted in the contract by fraud or mistake, plaintiff’s remedy would have been in equity to reform the contract. The testimony admitted to change the express terms of the contract was incomjoetent. It did not tend to show any fraud or mistake, nor refer to any statements of the agent of either party affecting the question. When a principal has received a contract, made in his name by his agent, which, on its face has but one meaning, such contract cannot be changed or avoided by showing a custom of business prior to the contract, and leaving a jury or court to infer that something else was meant. This case is, in my judgment, clearly ruled by Mich. Shingle Co. v. Insurance Co., 91 Mich. 441.

It is the duty of courts to interpret contracts, not to make them. When the language is susceptible of but one meaning, courts have no right to say that the j>arties meant something else. This is not a case where the assured disclosed his title to the agent of the insurer, and the agent neglected to disclose it to his principal, as was the case in Rowley v. Insurance Co., 36 N. Y. 550; Hodgkins v. Insurance Co., 34 Barb. 213; Franklin v. Insurance Co., 42 Mo. 456; Insurance Co. v. Wright, 22 Ill. 462; Insurance Co. v. Garfield, 60 Id. 124; Ætna Live Stock, etc., Ins. Co. v. Olmstead, 21 Mich. 246; McBride v. Insurance Co., 30 Wis. 562; nor of the failure of the agent of the insurer, who wrote the application and took the risk, to insert in it that a planing mill was used in the mill, as was the case in Insurance Co. v. Merritt, 47 Ala. 387; nor of the parol waiver of a condition in the policy by the agent till a change could be made to correspond *405with its terms, as in Winans v. Insurance Co., 38 Wis. 342; nor where the assured was induced by the agent to believe that he could keep gunpowder, which was prohibited by the policy, as in Peoria Ins. Co. v. Hall, 12 Mich. 213. These cases, and may like them, are based upon the fact that there was a difference between the representations in the policy and the actual facts existing at the time, or that there was an express waiver by the agent of a condition in the policy. In the present case there was no misrepresentation, no misunderstanding, no statement made to induce the assured to believe that its contract meant other than it read, or that it would be relieved from the full performance of its provisions. Plaintiff’s warranty was not that a certain state of facts existed, but that a certain state of facts should exist in futuro. If it did not desire such a contract it should have declined to make it. It ■cannot now be heard to say to the defendant: “You knew that I did not intend to keep my warranty, and therefore ■are estopped to say that I did not keep my contract.”

Judgment should be reversed, and no new trial ordered.

Montgomery, J., concurred with Grant, J.